The DTSA prohibits misappropriating trade secretsthis means acquiring trade secrets by improper means, such as theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. The DTSA explicitly declares that reverse engineeringby itselfis not an improper means. But, reverse engineering combined with an improper means will violate the DTSA. Generally, reverse engineering is allowed under federal trade secret law, the Defend Trade Secrets Act (DTSA). And different states may view reverse engineering contract provisions differently, which may in turn affect claims for misappropriation of trade secrets. The Supreme Court further confirmed the legitimacy of reverse engineering in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., where it held that the public at large remained free to discover and exploit the trade secret through reverse engineering of products in the public domain or by independent creation. 489 U.S. 141, 155 (1989). The . In denying the motion to dismiss the trade secret misappropriation claim, the court recognized that reverse engineering is only a proper means if it is not prohibited, including by a contract. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. Contract provisions imposing obligations not to reverse engineer or restricting the purpose for which reverse engineering can be performed are generally enforceable. Yes. The Supreme Court further confirmed the legitimacy of reverse engineering in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., where it held that the public at large remained free to discover and exploit the trade secret through reverse engineering of products in the public domain or by independent creation. 489 U.S. 141, 155 (1989). Autumn also has experience with Section 337 investigations at the International Trade Services and Industry Experience Overview, Trademark, Copyright, and Media Litigation, IP Licensing, Transactions, and Agreements, Fish's Intellectual Property Law Essentials, Fishs Intellectual Property Law Essentials. For example, a Texas court found that an alleged breach of an agreement that required defendant to maintain the confidentiality of and not reproduce the technology-in-dispute was sufficient to maintain a trade secret misappropriation claim under Texas law. If a defendant conducts reverse engineering in breach of a contract, that activity may serve not only as the basis for breach of contract, but in some courts, as the basis for a trade secret misappropriation claim. Can parties contract away the right to reverse engineer? California explicitly recognizes reverse engineering or independent derivation alone shall not be considered improper means. Similarly, in Texas, reverse engineering unless prohibited is statutorily defined to be a proper means of obtaining information. Reverse engineering refers to the process of working backward from an available product to understand what its parts are, how it functions and/or how it was made. Contact the authors or visitFishs Intellectual Property Law Essentials. For example, if the product that was reverse engineered was stolen or obtained through lying, then there is still trade secret misappropriation. In denying the motion to dismiss the trade secret misappropriation claim, the court recognized that reverse engineering is only a proper means if it is not prohibited, including by a contract. And different states may view reverse engineering contract provisions differently, which may in turn affect claims for misappropriation of trade secrets. The comments to the Uniform Trade Secrets Act, which most states have adopted in some form, recognize that it is lawful to conduct reverse engineering, provided that the analyzed product was obtained by a fair and honest means, such as purchase of the item on the open market.. There, the court found that private parties may not expand the statutory definition of improper means under California trade secret law to include reverse engineering. The Texas Uniform Trade Secret Act, for example, defines reverse engineering as the process of studying, analyzing, or disassembling a product or device to discover its design, structure, construction, or source code.. Her practice focuses on patent and trade secret litigation with an emphasis on software, network and internet technologies. A California court, on the other hand, handled a similar situation differently. The Supreme Court further confirmed the legitimacy of reverse engineering in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., where it held that the "public at large remained free to discover and exploit the trade secret through reverse engineering of products in the public domain or by independent creation." 489 U.S. 141, 155 (1989). Is reverse engineering permissible under state trade secret laws? There, the court found that private parties may not expand the statutory definition of improper means under California trade secret law to include reverse engineering. While reverse engineering in violation of an End User License Agreement could be the basis for a breach of contract claim, it could not be the basis for a trade secret misappropriation claim. Is reverse engineering permissible under state trade secret laws? Build a Morning News Brief: Easy, No Clutter, Free! Is reverse engineering permissible under federal trade secret law? Reverse engineering refers to the process of working backward from an available product to understand what its parts are, how it functions and/or how it was made. Ms. Prescott has experience before U.S. district courts nationwide and she has handled all aspects of litigation, including pre-suit Qiuyi (Autumn) Wu is a litigation associate in the Boston office of Fish & Richardson P.C. The United States Supreme Court has ruled that state trade secret laws may not preclude discovery by fair and honest means, such as reverse engineering. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 476 (1971). Contract provisions imposing obligations not to reverse engineer or restricting the purpose for which reverse engineering can be performed are generally enforceable. While reverse engineering in violation of an End User License Agreement could be the basis for a breach of contract claim, it could not be the basis for a trade secret misappropriation claim. For example, if. Crafting a Comprehensive Trade Secret Strategy, Recent Developments in Trade Secrets Damages, Webinar | Post-Grant for Practitioners: Post-Grant Appeals, Webinar | Successful Strategies for Patenting Bioinformatics and Computational Genomics. The comments to the Uniform Trade Secrets Act, which most states have adopted in some form, recognize that it is lawful to conduct reverse engineering, provided that the analyzed product was obtained by a fair and honest means, such as purchase of the item on the open market.. The DTSA explicitly declares that reverse engineeringby itselfis not an "improper means." But, reverse engineering combined with an "improper means" will violate the DTSA. For example, if the product that was reverse engineered was stolen or obtained through lying, then there is still trade secret misappropriation. When performing reverse engineering, however, it is critical to be aware of the contractual obligations and rights from purchase, end user license, and other agreements that may impact the scope of permissible reverse engineering. If a defendant conducts reverse engineering in breach of a contract, that activity may serve not only as the basis for breach of contract, but in some courts, as the basis for a trade secret misappropriation claim. Law Firms: Be Strategic In Your COVID-19 Guidance [GUIDANCE] On COVID-19 and Business Continuity Plans. California explicitly recognizes reverse engineering or independent derivation alone shall not be considered improper means. Similarly, in Texas, reverse engineering unless prohibited is statutorily defined to be a proper means of obtaining information. In that case, the defendant gave a device embodying the alleged trade secret to a third party to reverse engineer in violation of the defendants duty of confidentiality to the plaintiff. More questions? Can parties contract away the right to reverse engineer? Is reverse engineering permissible under federal trade secret law? A California court, on the other hand, handled a similar situation differently. The Texas Uniform Trade Secret Act, for example, defines reverse engineering as the process of studying, analyzing, or disassembling a product or device to discover its design, structure, construction, or source code.. For example, a Texas court found that an alleged breach of an agreement that required defendant to maintain the confidentiality of and not reproduce the technology-in-dispute was sufficient to maintain a trade secret misappropriation claim under Texas law. Her practice focuses on patent litigation across a wide range of technologies, primarily in the fields of biotechnology, life sciences, and mechanical arts. Generally, reverse engineering is allowed and will not violate trade secret laws by itself. In that case, the defendant gave a device embodying the alleged trade secret to a third party to reverse engineer in violation of the defendants duty of confidentiality to the plaintiff. When performing reverse engineering, however, it is critical to be aware of the contractual obligations and rights from purchase, end user license, and other agreements that may impact the scope of permissible reverse engineering. DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Generally, reverse engineering is allowed and will not violate trade secret laws by itself. Katie Prescott is a principal in the Silicon Valley office of Fish & Richardson P.C. The United States Supreme Court has ruled that state trade secret laws may not preclude discovery by fair and honest means, such as reverse engineering. Generally, reverse engineering is allowed under federal trade secret law, the Defend Trade Secrets Act (DTSA). The DTSA prohibits misappropriating trade secretsthis means acquiring trade secrets by improper means, such as theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. 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